Knut Wicksell’s principle of just taxation

7 Oct, 2019 at 18:19 | Posted in Economics | 21 Comments

knut-wicksellMy claim is that the very concept of taxation presupposes that all incomes are equally justified. This applies no matter which principle of taxation one wishes to put into practice. A tax that only reduces by a certain amount what a person unjustly possesses cannot be regarded as an appropriate compensation on his part for the efforts the state has made on his behalf, nor can it be seen as a sacrifice comparable to the sacrifice another person has to bear out of the income he or she has earned in legitimate ways.


  1. One can see that economists aren’t any better at justness as the next guy.

  2. A wise man old Knut! 🙂

  3. Great quote I would like to use later and cite. What is the source citation I should use? It reminds me of a story in the Urantia Book called Counseling the Rich Man where ten different methods of amassing wealth are noted:

    Ten different methods of amassing material wealth:

    1.  Inherited wealth—riches derived from parents and other ancestors.
    2.  Discovered wealth—riches derived from the uncultivated resources of mother earth.
    3.  Trade wealth—riches obtained as a fair profit in the exchange and barter of material goods.
    4.  Unfair wealth—riches derived from the unfair exploitation or the enslavement of one’s fellows.
    5.  Interest wealth—income derived from the fair and just earning possibilities of invested capital.
    6.  Genius wealth—riches accruing from the rewards of the creative and inventive endowments of the human mind.
    7.  Accidental wealth—riches derived from the generosity of one’s fellows or taking origin in the circumstances of life.
    8.  Stolen wealth—riches secured by unfairness, dishonesty, theft, or fraud.
    9.  Trust funds—wealth lodged in your hands by your fellows for some specific use, now or in the future.
    10.  Earned wealth—riches derived directly from your own personal

    This ideals expressed in how to deal with this wealth are, well, idealistic to put in mildly.

    • It’s from Bo Sandelin’s (editor) “Knut Wicksell: Selected papers”, vol II, Routledge 1999.

      • That one i have by my old prof Lars 🙂 ,as most of Knuts work,but i think many of his most estatic neoclassical “fanboys” as our “dear friend” in Princeton prof Krugman,and others 🙂 , have read Knut quite selectively, I think, .They do not know much about his radical roots and influences in a wide range of areas, and his long walk in the desert until he eventually got a professorship! 🙂 Or for example Malthus great influence on him! They only talk about his “natural interest rate” it seems! They might have to take a course by a certain prof. Syll in Malmö to catch up maybee? 🙂

      • Thanks Lars!

    • According to Branko Milanovic about 80% of one’s income – or at least incomes above average – is due to sheer luck. There is no harm if it is taxed away.

      • I think it is a bit more nuanced than that 😉

  4. On November 2,1908 Knut Wicksell gave a speech at the People’s House on the topic of the Throne, the Altar, the Sword and the Money Bag for 731 people. In the speech, Wicksell thus criticizes four of society’s powerful institutions: the monarchy (the throne), the church and the priesthood (the altar), the army (the sword) and the upper class (the money bag).

    Police Chief Carl Westling is on hand to monitor that no crime is being committed. In this six-page report, he talks about Wicksell’s lectures and refers to large parts of the content. According to Westling’s report, Wicksell criticizes the lack of freedom of speech and predicts that he may risk being punished for what he says during the lecture. On the occasion of the Council of Amalthea, Wicksell also discusses when it can be considered right to use force. Wicksell also jokes about how it might sound if Conservative Prime Minister Arvid Lindman spoke before a group of young socialists.

    Page 5 of the report refers to the opinion on the virgin birth of Jesus for which Wicksell is being charged. About how Jesus’ mother Mary became pregnant and how Joseph reacted to it, according to the record, Wicksell jokes:

    “What should we say about the Holy Ghost, I do not think he seduced the girl, she was willing herself, she did not ask her fiancé for advice. Still, I think it was a pity for the poor man. He certainly received a great reward, for he received no less than six revelations in his sleep. I think his reward in a coming life exceeds all description. He probably still went and growled and said to himself, “It was all damn yet that I should not make my little Jesus myself.” But then the world could not be saved. “

    • Wow, what interesting history! Just to be clear, the Urantia Book asserts the Virgin birth is BS and the conception qua coitus was as normal as any other 🙂 But that is not the point after all. What is the point is the ideas, the concepts, regarding wealth and stewardship. If only humanity were a fraction as idealist, of course with practical application, we might end up with something in the ballpark of say, like some more equitable Nordic countries and democratic socialism. Instead we have in the US predatory capitalism writ large ala Trumpism and the hypocrisy of Evangelical fundamentalism, the monstrous breeding if two fundamentalisms, market fundamentalism wedded to religion fundamentalism.

      • The blending of the two incurred the same selectivity Jan alludes to above by a process that is reminiscent of Nicea – then codified in economic law [tm]. Currently the floor would seem to be littered with the same clutter post the editorial process of the prior event. Albeit I await the angelic priests response to Balian of Ibelin in the movie Kingdom of Heaven: convert … repent later …

        • 🙂 !

          • Thanks Skippy! 🙂

      • Do you think that for example lets say a Krugman had dared to have had the courage to have such a speech in Princeton Uni ? No i don´t think so ,but he often refers to his admiration of Wicksell, so why not? 🙂

        • Wellie I would have to model that on bread and butter then apply some maths and physics to see what side the of the bread hit the floor.

  5. Knut Wicksell in 1908, was sentenced to two months’ imprisonment (under Penal Law 7: 1: “by loading or mocking God’s holy word… Causes general outrage”) and served the October-November 1909 sentence at the Ystad prison.

    • Was this in Sweden? That’s sad, glad things have evolved 🙂

      • It´s so much misunderstandings of Swedish economic history.It was The poorest country in Europe a long with Portugal i think,until 1920-30-ts i think.But a massive Labor movent,unions a lot of strike fights,brought a radical socialdemocratic goverment to power, with a sort of “Radical-Keynsian” policy in to power 1932,before Keynes 1936 General Theory. Then Swedish model of welfare strated . A wise minister of finance Ernst Wigforss and budget shaped merely by Gunnar Myrdal was introduced and the economy and jobs and wealth took off .It was before New Deal. John Kenneth Galbraith once wrote “If there would be any justice in the world,the so called Keynsian revolution in the world,should be called Swedish revolution”

  6. From a two factor production function to three –

    • Interesting read. For me, living a lot in forests and tree farms, it is incredible hubris to think you can value the land by the board-feet it produces. There is so much more in a stand of old growth trees. Tree farms should be allowed to go to old growth; they would resist fires better. Humans should learn to live in nature again using natural, temporary shelters.

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